CARPE DIEM

Professor Mark J. Perry's Blog for Economics and Finance

Tuesday, August 11, 2009

IPOs Bounce Back in Q2 and First Half of Q3 2009

TechCrunch -- Another small sign that the worst of the recession may be behind us: IPO registrations are clawing their way back from the shadow of the valley of death (also known as the first quarter if 2009, when there were zero IPOs registered with the SEC). So far in July and August alone there have been 14 IPOs, as many as in the previous three quarters combined. These numbers and the chart above are based on the number of IPO filings tracked by Hoovers as of yesterday. Renaissance Capital counts 16 IPO registrations in July and August, and if you look on the SEC’s Edgar site it looks like a few more filed today.

Registering for an IPO doesn’t mean that the company is actually going to go through with it, but the volume of filings is a good confidence index for startups. Most of the companies filing are not technology-related (Hyatt Hotels, RailAmerica, Bayview Mortgage Capital), although Ancestry.com did file on August 3. In terms of actual IPOs, we saw five venture-backed companies start trading in the second quarter, including OpenTable, which is still trading above its $20 offering price.

All this means is that more companies are willing to take a shot at going public, which is encouraging in and of itself. But don’t expect the actual number of IPOs to recover for at least another year.MP: We're only about half way through the third quarter, and we can expect even more IPO registrations over the next seven weeks left in Q3 2009.

Markets In Everything: Style Your Garage Door

Style-Your-Garage.com -- The days of boring garage doors are numbered! That’s because there are now photo tarpaulins for garage doors from style-your-garage.com!Garage doors have until now mostly been mouse grey and ugly – and often spoil the appearance of well-maintained homes. But now, the days of those hideous garage doors are numbered! That’s because the new photo tarpaulins from style-your-garage.com can give monochrome up-and-over garage doors a whole new look. The printed-on 3D motifs are deceptively realistic and will cause neighbours, friends and passers-by to stop and stare!

Wrong Diagnosis of Our "Disease Mgmt. System"

Washington is working on reform initiatives that focus on one problem: the fact that the system is too expensive (and consequently too exclusive.) Reform proposals, such as the "public option" for government insurance or calls for drug makers to drop prices, are aimed mostly at boosting affordability and access. Make it cheap enough, the thinking goes, and the 46 million Americans who can't afford coverage will finally get their fair share. But what's missing, tragically, is a diagnosis of the real, far more fundamental problem, which is that what's even worse than its stratospheric cost is the fact that American health care doesn't fulfill its prime directive -- it does not help people become or stay healthy. It's not a health care system at all; it's a disease management system, and making the current system cheaper and more accessible will just spread the dysfunction more broadly.

5-Yr. Cancer Survival Rates: US Dominates Europe

Based upon period survival data for 2000-02 from 47 European cancer registries, 5-year survival rates were found to be higher in the U.S. than in a European composite for cancer at all major sites (see table above, click to enlarge). For men (all sites combined), 47.3% of Europeans survived 5 years, compared to 66.3% of Americans. For women, the contrast was 55.8% vs. 62.9%. The male survival difference was much greater than the female primarily because of the very large difference in survival rates from prostate cancer.

Thus, the US appears to screen more vigorously for cancer than Europe and people in the US who are diagnosed with cancer have higher 5-year survival probabilities.

From a new NBER working paper "Low Life Expectancy in the United States: Is the Health Care System at Fault?" (abstract here and full paper here), by Univ. of Pennsylvania professors Samuel Preston and Jessica Ho.

Yikes!! August 8 is Tax Freedom Day in Sweden

Last Saturday (August 8), Sweden "celebrated" its Tax Freedom Day, the day in the year that the average citizen finishes paying all taxes to the government, and can keep their salary for the remainder of the year, according to Swedish blogger Hus Langford, who writes:Sweden's total tax burden for a single worker: 48.6%. The US is 30%, and the UK 29.7%. (Belgium is over 55%. Whoa.) On top of that is VAT, which at 25%, is the highest in the world, adding a quarter to the cost of any good or service.

MP: For the U.S., Tax Freedom Day this year was April 13, compared to April 21 last year and April 27 in 2007. The worst Tax Freedom Day for the U.S. was May 3, 2000. In the early 1900s, Tax Freedom Day was as early as January 19, 1910, and was in mid-February in 1920 and 1930 (historical data here).

Bank Index Hits 8-Mo. High, Up 144% from March

The KBW Bank Sector (BKX) Index is a capitalization-weighted index composed of 24 geographically diverse stocks representing national money center banks and leading regional institutions including Bank of America, Citigroup, Comerica, JP Morgan Chase, Wells Fargo, etc. The KBW Index closed yesterday (Monday) at almost an 8-month high of 45.53, the highest close since mid-December 2008. From the bottom in early March, the KBW Index is up by a whopping 144.5% (see chart above). Yet another sign that the U.S. financial sector is healing, and another sign of general economic recovery taking place in the U.S. economy and financial markets.

Quotes of the Day

1. Many years ago, there was a comic book character who could say the magic word "Shazam" and turn into Captain Marvel, a character with powers like Superman's. Today, you can say the magic word "diversity" and turn reverse discrimination into social justice.

2. Someone pointed out that blaming economic crises on "greed" is like blaming plane crashes on gravity. Certainly planes wouldn't crash if it wasn't for gravity. But when thousands of planes fly millions of miles every day without crashing, explaining why a particular plane crashed because of gravity gets you nowhere. Neither does talking about "greed," which is constant like gravity.

Monday, August 10, 2009

Health Care Is Not A Right; and Socialized Medicine is Not Only Impractical, It's Also Immoral

Most people who oppose socialized medicine do so on the grounds that it is moral and well-intentioned, but impractical; i.e., it is a noble idea—which just somehow does not work. I do not agree that socialized medicine is moral and well-intentioned, but impractical. Of course, it is impractical—it does not work—but I hold that it is impractical because it is immoral.Take the simplest case: you are born with a moral right to hair care, let us say, provided by a loving government free of charge to all who want or need it. What would happen under such a moral theory?

Haircuts are free, like the air we breathe, so some people show up every day for an expensive new styling, the government pays out more and more, barbers revel in their huge new incomes, and the profession starts to grow ravenously, bald men start to come in droves for free hair implantations, a school of fancy, specialized eyebrow pluckers develops—it's all free, the government pays. The dishonest barbers are having a field day, of course—but so are the honest ones; they are working and spending like mad, trying to give every customer his heart's desire, which is a millionaire's worth of special hair care and services—the government starts to scream, the budget is out of control. Suddenly directives erupt: we must limit the number of barbers, we must limit the time spent on haircuts, we must limit the permissible type of hair styles; bureaucrats begin to split hairs about how many hairs a barber should be allowed to split. A new computerized office of records filled with inspectors and red tape shoots up; some barbers, it seems, are still getting too rich, they must be getting more than their fair share of the national hair, so barbers have to start applying for Certificates of Need in order to buy razors, while peer review boards are established to assess every stylist's work, both the dishonest and the overly honest alike, to make sure that no one is too bad or too good or too busy or too unbusy. In the end, there are lines of wretched customers waiting for their chance to be routinely scalped by bored, hog-tied haircutters, some of whom remember dreamily the old days when somehow everything was so much better.

Do you think the situation would be improved by having hair-care cooperatives organized by the government?—having them engage in managed competition, managed by the government, in order to buy haircut insurance from companies controlled by the government?

If this is what would happen under government-managed hair care, what else can possibly happen—it is already starting to happen—under the idea of health care as a right? Health care in the modern world is a complex, scientific, technological service. How can anybody be born with a right to such a thing?

~Leonard Peikoff speaking at a Town Hall Meeting on Health Care in Costa Mesa, California, on December 11, 1993.

Markets In Everything: Medical Billing Advocates

These days, dealing with medical bills and insurance claims makes April 15 look easy. The medical jargon and inscrutable coding on invoices and explanations of benefits are indecipherable for most lay people. Worse, seriously ill patients may simply be too sick or too broke to deal with the mountains of red tape. That can lead to unpaid medical debts and even bankruptcy.It’s no wonder that a cottage industry has sprung up to fill this void. Known as medical billing advocates, these middlemen and women help patients deal with the paperwork and haggling often associated with medical costs. In general, medical billing advocates help you find errors in your bills, negotiate with your insurer to appeal coverage denials, or negotiate lower fees with your medical care providers.~New York TimesHT: Moneybagzz

MP: After peaking last October, both the Google search volume (top line) and news reference volume (bottom line) have fallen to the lowest levels in a year (see top chart above, click to enlarge).

The bottom chart shows a similar pattern for all three terms/words together: Great Depression, recession and layoffs. I think these Internet traffic patterns confirm that the worst is behind us, and that the exaggerated comparisons of today's economic conditions to the Great Depression are beginning to wind down.

Life Expectancy Higher in US than UK at Age 65+

In the debates on health care, many claim that the relatively low life expectancy in the U.S. compared to Canada and Europe and elsewhere is evidence of an inferior, second-rate American health care system. See some examples below:

Example 1: Canada's life expectancy average is 82.1 years. The life expectancy for citizens of France is 80.9 years and the average life expectancy of those living in the U.K. is 78.9 years. In the United States, the average life expectancy rate is 78.1. But more importantly than life expectancy averages is the fact that in each of those nations, every single citizen has access to health care. The United States is the only developed country in the world that does not offer health care to all of its citizens.

Example 2:Out of 30 developed nations, life expectancy in the United States ranks 21st: Life expectancy in the United States is 4.6 years less than Japan, 2.1 years less than France and 2.6 years less than Canada. The United States has fewer physicians, nurses and hospital beds than most developed nations. In terms of continuity of care (i.e., five-plus years with the same doctor), the United States is the worst of all developed nations. By every objective measure, the United States has a second-rate health care system.
The chart above (click to enlarge) displays data for the U.S. (data here for 2004) and the U.K. (data here for 2004-06) showing: a) life expectancy at birth for males and females in both countries, and b) the additional life expectancy once a person reaches a certain age in each country. (Note: I'm looking for comparable data for Canada or France, etc.)

It's true that life expectancy is higher at birth in the U.K., by 1.7 years for males and .90 years for females, but life expectancy at older ages is greater in the U.S. than in the U.K. For men, life expectancy is greater at birth and up until age 60 in the U.K., but then the pattern reverses and men can expect to live longer in the U.S. at ages 65, 70, 75, 80 and 85. By age 75, male life expectancy is greater than in the U.K. by at least six months. Likewise, U.K. women have higher life expectancy at birth and up until age 55; at ages 60 and above, American women have greater life expectancy than their U.K. counterparts, and by age 75 women live longer in the U.S. than in the U.K. by 8-9 months.

Since quality health care (surgery, treatment, critical care, advanced testing, expensive prescription drugs) is most important during the last years of our lives, couldn't we say that the U.S. has a first-rate health care system, especially at the time when quality care is most important, and it extends the lives of older people in U.S. by at least 1/2 year?

WALL STREET JOURNAL -- The larger story here is that the economy’s natural healing tendencies are asserting themselves. Banks are writing down bad loans, raising new capital, and in general cleaning up their balance sheets. Having reduced their inventories to the nub, manufacturers are looking to increase production at the first sign of demand. Households have also been improving their balance sheets by saving more. The rush to exploit the federal “cash for clunkers” car-purchase subsidy testifies that consumers have money that they will spend when they conclude that their jobs are safe and they have some financial breathing room. Aiding all of this has been the unprecedented monetary stimulus provided by the Federal Reserve, pushing liquidity that has helped to revive the credit and stocks markets. The $800 billion Obama spending stimulus has by definition been a bit player, since only a little more than 10% of it has even been spent. We’d be better off recalling the money.

PAUL KRUGMAN -- So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.Probably the most important aspect of the government’s role in this crisis isn’t what it has done, but what it hasn’t done: unlike the private sector, the federal government hasn’t slashed spending as its income has fallen. (State and local governments are a different story.) Tax receipts are way down, but Social Security checks are still going out; Medicare is still covering hospital bills; federal employees, from judges to park rangers to soldiers, are still being paid.In addition to having this “automatic” stabilizing effect, the government has stepped in to rescue the financial sector. You can argue (and I would) that the bailouts of financial firms could and should have been handled better, that taxpayers have paid too much and received too little.Last and probably least, but by no means trivial, have been the deliberate efforts of the government to pump up the economy. From the beginning, I argued that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, was too small. Nonetheless, reasonable estimates suggest that around a million more Americans are working now than would have been employed without that plan — a number that will grow over time — and that the stimulus has played a significant role in pulling the economy out of its free fall.All in all, then, the government has played a crucial stabilizing role in this economic crisis. Ronald Reagan was wrong: sometimes the private sector is the problem, and government is the solution.

Sunday, August 09, 2009

Health Insurance Is Available for Less Than $100 Per Month in GA, Including Dental and Vision

We keep hearing that health insurance is so expensive that 40-50 million Americans cannot afford it. I have argued before that since most Americans seem to be able to afford cell phones, laptops, iPods and cable TV, they can probably afford health insurance.

Here's another example on how affordable health coverage can be, this time using the Blue Cross Blue Shield website for the state of Georgia and getting a quote for a 25-year old male living in Atlanta:

The "Tonik" plan offers the following services (including dental and vision coverage, $20 office visits, physician choice, etc.) for only $97.46 per month (there are other cheaper plans, this is a midrange plan):

In June, 7,722 new and resale houses and condos closed escrow in the region encompassing Miami-Dade, Palm Beach and Broward counties. That was up 17.5% from May (6,572) and up 20.6% from 6,404 in June 2008, according to MDA DataQuick of San Diego. The number of homes sold rose above the year-ago mark for the fourth consecutive month despite historically low new-home sales.Resales of single-family houses and condos have risen on an annual basis for seven straight months.

The Miami region's median sale price inched higher than the prior month for the second month in a row in June but remained 37% lower than a year ago and 45% below its June 2007 peak.

At recent townhall-style forums held by members of Congress or administration officials, some belligerent tea-baggers have held up signs saying, "What's wrong with profit?" The answer is this: It has no place in the health insurance industry. It distorts and disrupts the provisions of health care, adding costs without adding quality of care.

The health care market doesn't function like the market for automobiles or artichokes or flat-screen TVs. If you don't like the price, you just don't buy. But you walk away from expensive health insurance at your own risk.

~Cynthia TuckerMP: Where to start? First, if our employers and the government provided us with "free" automobiles, food and TVs the way they provide us with "free" health insurance, those markets would be pretty distorted, too. That's a start, I'm sure you all have something to say....

Sacrificing quality healthcare for you and your family should never be an option. As a healthcare provider, we see the effects of a struggling economy on the patients and neighborhoods we serve.

That's why we've created the Take Care Recovery Plan to help our current and future patients. It provides access to free healthcare visits for our patients, and their families, who have lost their jobs and are uninsured.

As these numbers (in the chart above) indicate, Boston experiences by far the longest average wait times of any of the 15 metropolitan markets. In addition, wait times in Boston increased in 2009 over 2004 in three of the four specialties where comparisons are possible: dermatology, ob/gyn and orthopedic surgery. In general, wait times decreased in 2009 relative to 2004 in most metropolitan markets surveyed, with several exceptions.

Long wait times in Boston may be driven in part by the healthcare reform initiative that was put in place in Massachusetts in 2006. The initiative succeeded in covering many of the state’s uninsured patients. However, it has been reported that many patients in Massachusetts are encountering difficulty in accessing physicians. Survey results support these reports. Long appointment wait times in Boston also may signal what could happen nationally in the event that access to healthcare is expanded through healthcare reform. Increased demand resulting from improved access to care for approximately 47 million uninsured people can be expected to extend doctor appointment wait times in many markets. (Bold added.)

Saturday, August 08, 2009

The recession might be winding down, but the "mancession" continues. The chart above shows the difference between monthly unemployment rates for men and women, and the unprecedented gap isn't getting better. For July, the unemployment rate for all men was 10.5%, a decrease of .10% from the 10.6% rate in June, whereas the jobless rate for women fell by .20% to 8.1% in July from 8.3% in June, and the male-female jobless rate gap increased to 2.4% in July from 2.3% in June (see graph above, data here).

The male unemployment rate has exceeded the female jobless rate for each of the last 32 months, going back to December 2006, and is the second longest consecutive monthly period of male unemployment exceeding female unemployment in BLS history (back to WWII). The only longer period of a positive male-female jobless rate gap was the 45 month period from June 1990 to February 1994, but the gap in that period was mostly below 1%, and the gap during the "Great Mancession" has been above 1% and even above 2% for much of the current period.

Lesson From a Parrot: Buy and Hold Blue Chips

SKY NEWS -- A five-year-old female parrot called Strawberry has proved to be smarter than human investors in a stock investment contest. The parrot from Papua New Guinea finished third in the six-week challenge, said Paxnet, an online stock market information provider. Strawberry competed with 10 stock investors in South Korea.

Human investors picked any stocks they wanted but the parrot, using its beak, made random choices from balls representing 30 blue chips, including Samsung Electronics. "The outcome of our contest was amazing. Strawberry stood third with her investment return standing at 13.7%," Paxnet general manager Chung Yeon-Dae said.

Human investors averaged a 4.6% loss, with only 2 beating the parrot - one by 64.4% and one by 21.4%. The human investors mostly chose to trade shares of small and medium-sized firms. They each made an average of 190 trades over the 6 weeks. Organizers gave the parrot 7 chances to pick shares over the same period. "Our experiment proved that making long-term investments in blue chips is safe and effective," Chung said.

Adjusted Jobless Claims Suggest Recession is Over

With July employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the July labor force of 154,504,000 and the July average for initial unemployment claims (574,900 for the 4-week moving weekly average). This measure of initial jobless claims, adjusted for the size of the U.S. labor force, shows that jobless claims peaked during this recession above the levels of the last two recessions (1990-1991 and 2001), but were never anywhere close the levels of the previous three recessions in the mid-1970s and early 1980s (see chart above). In other words, this recession was worse than the last two, but not nearly as severe as the previous three, using this adjusted measure of jobless claims.

Additionally, the sharp .05% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3721% in July follows the same pattern of .05% reductions in adjusted claims at the end of the 2001 recession (a .052% reduction from .3318% in October 2001 to February 2002) and at the end of the 1990-1991 recession (a .058% reduction from .3915% in March 1991 to .3327% in July 1991).

See related post by Scott Grannis here, who reports that this type of reduction in job losses as a percent of the workforce suggest that the recession ended in June.

Back in early March, the Intrade odds of positive economic growth in the U.S. for the third quarter was only 25%. Those odds of positive real GDP growth in Q3 have recently risen to 90%, as many economic indicators now point to an economic recovery and positive growth this quarter (July, Aug., Sept.), see chart above (Intrade link here).

Friday, August 07, 2009

Reality Check: Trucks Are The Most Popular "Cash for Clunker" Vehicle and Some Only Get 14 mpg!

NEW YORK (CNNMoney.com) -- What are people trading their clunkers in for? It depends on who you ask. The government's results showed small cars as the top choice for shoppers looking for Cash for Clunker deals. But an independent analysis by Edmunds.com disputed those results, and showed that two full-size trucks and a small crossover SUV were actually among the top-ten buys.

The discrepancy is a result of the methods used. Edmunds.com uses traditional sales measurements, tallying sales by make and model. The government uses a more arcane measurement method that subdivides models according to engine and transmission types, counting them as separate models.

Sales of truck models would tend to be heavily diluted using the government's method because practically each version counts as a different vehicle. The difference in tallying methods would not affect the overall totals of trucks, as opposed to cars purchased under the program, only the sales rankings of individual models.

Sales of GM's Silverado truck, under the government's counting method, were divided among five different versions. So were the Ford F-150s. If the different versions of these trucks were considered the same vehicle, as auto sales are normally reported, sales of these trucks would look much heftier.

For Acceptance to Med School, Color Counts; A Lot

The chart above shows the acceptance rates for whites, Asians and blacks to U.S. medical schools from 2005-2007, based on different combinations of undergraduate grade point averages (GPA) and scores on the Medical College Admission Test (MCAT), using data from the Association of American Medical Colleges (full data available here).

In all cases above, being black significantly increases the chances of being accepted to medical school compared to being Asian or white, when all three groups of applicants have the same GPA and test scores. In some cases, e.g. having a GPA between 2.80-2.99 and an MCAT score between 27-29, being black increases the chances of being accepted by a factor of 6.35 vs. being Asian and a factor of 4.17 vs. being white. (Note: There were not enough Hispanic applicants to include their acceptance rates in the table.)

15 Years Later, The Healthcare Issues Are the Same

Bellow are some excerpts from the excellent article: "Health Care Reform: A Free Market Perspective," co-authored fifteen years ago (1994) by Harvard's Dean of the Medical School, Dr. Jeffrey Flier (MD), and featured yesterday on Greg Mankiw's blog:Introduction:Problems with inflation of medical costs and increased numbers of uninsured individuals have resulted in widespread calls for reform of the U.S. health care system.Proposed reforms have generally emphasized increased regulation of the medical and insurance industries, but disputes over the cost and consequences of these proposal has so far prevented legislation from being passed. This paper is presented from an alternative perspective that views the current symptoms on cost and access as the results of decades of flawed public policy, rather than government inaction (bold added). We trace the origins of dysfunctional health care markets in prior public policy, and outline an approach to healing the health care system based on a new dedication to free market principles and individual choice.

Licensure:Licensure, supported as a means to ensure physician competence and prevent fraud, has been an effective means for the profession to restrict its numbers and limit competition from alternative, often lower cost providers. Certification might work equally well, while authorizing increased services from an array or non-MD practitioners.

Conclusion:The health policy community has paid insufficient attention to the role of past policies in accelerating costs and diminishing access to insurance and has been too quick to recommend solutions based on optimistic projections of new regulatory efforts. Reform and aid to those in need based on free market principals are unique in recognizing the values of diversity and the desirability of choice in the highly personal realm of medical decision making. Freed of perverse incentives and regulatory obstacles, including those that would be exacerbated by much of the recently proposed reform legislation, markets in medicine, as in other areas, will outperform politics in making desirable health care available to Americans.

MP: I especially liked the section on licensure, a very refreshing viewpoint, especially coming from an MD. And speaking of allowing increased services from non-MD practitioners, I became aware yesterday that there is a movement in the field of dentistry to allow lower-cost dental hygienists to offer increased dental services like filling cavities. I think the American Dental Hygienists' Association is pushing for increased services for hygienists, but they are up against a very powerful trade group: the American Dental Association, which I think is resisting the change. I'll find out more and post about this later. If anybody has information about this issue, please let me know.

Private, Charity Clinics Offer Healthcare Solution

As a follow-up to my recent post on The Shriners Hospital for Children, which provides free medical care for children, and is an example of a privately-funded, non-government, charitable solution to rising health care costs, there was an excellent commentary in Tuesday's Atlanta Journal-Constitution "Charity Clinics Can Be Reform Model," by Ross Mason, president of the board of directors of Georgia Free Clinic Network. Excerpts below:At charity clinics throughout Georgia, patients with no health insurance or who don’t qualify for government programs jam telephone lines to obtain an appointment. If the clinic doesn’t take appointments, patients line up at the doors and wait for hours for a chance to see a doctor, nurse or dentist. In 2008, Georgia’s 100-plus charity clinics, such as Athens’ Mercy Health Center, cared for more than 175,000 patients. This year, some clinics are seeing as much as a 300 percent increase in patients due to the state’s record unemployment rate. Still, many get turned away.

Community-based clinics use volunteers to provide care and charge little to nothing for patients who have no other means of accessing health care. Georgia’s charity clinics provide between $200 million and $400 million annually in uncompensated care, according to a 2005 state auditor’s report. That amount will likely be even greater this year because of the rising number of unemployed.

Washington politicians should recognize the important and mostly invisible role these clinics play and examine how they save taxpayer money. In 2008, the nation’s 1,200 charity clinics served 4 million patients. That’s 4 million patients, often without the ability to pay, who didn’t use the government as a source for their health care. These facts should prompt President Barack Obama to give charity clinics a seat at the table to help devise a health care strategy for the 21st century.Until we find solutions to get more Americans covered by health insurance, the federal government needs to encourage the creation and stabilization of additional charity clinics run by the private sector and staffed by physicians, nurses and dentists who donate their time. It’s a cost-effective solution that fits into our new president’s challenge to return to a spirit of giving.HT: NCPA

Markets In Everything: iPhone Check Deposit App

San Antonio Express News -- Need to deposit a check into your USAA Federal Savings Bank account? USAA has an app for that. The San Antonio-based company is testing the feature for its iPhone application among its employees and plans to release it to the public soon.

With the application, USAA members simply sign the back of any check and then use their iPhone camera to take a picture of the check's front side and back side. They enter some information into the application — including the amount and where it's to be deposited — and then the funds are credited to the designated account.

Most checks will get immediate availability of funds. USAA uses an algorithm that reads details on a check to make sure it's not phony.

FWIW

WSJ -- The consequences of misunderstanding the texting lingo can be mortifying. Cassandra McSparin, 23, of Jim Thorpe, Pa., knew a woman whose friend’s mother had died. The woman texted her friend: “I’m so sorry to hear about your mother passing away. LOL. Let me know if there’s anything I can do.” It turns out she thought LOL meant “Lots of love.” UG2BK!

Associated Press -- An emergency call center in the basement of the county jail in Waterloo, Iowa, became the first in the country to accept text messages sent to "911," starting Wednesday. Call centers around the country are looking at following in its footsteps, as phone calls are now just one of many things phones can do.

Black Hawk County police chief Thomas Jennings said 911 texting should be of particular help to the county's deaf and hard-of-hearing residents, who have had to rely on more cumbersome methods to reach 911. There have also been several cases around the country of kidnap victims summoning help by surreptitiously texting friends or relatives, who then called 911. With direct texting to 911, they should be able to get help faster.

Cartoon of the Day

7th Monthly Increase in Used Vehicle Price Index

MANHEIM CONSULTING -- Wholesale used vehicle prices (seasonally-adjusted basis) rose for the seventh consecutive month in July. The Manheim Used Vehicle Value Index for July was 115.4, an increase of 5.0% from a year ago.

Although cash for clunkers (C4C) and the resulting revitalization of new vehicle sales stole all of the headlines in July, used vehicle retail activity remained solid and higher residuals and recovery rates boosted the earnings of lenders and lessors. And, despite having to pay higher prices for inventory, dealers have seen an improvement in used vehicle retail gross margins.

From a previous Manheim Consulting report:

Some analysts have suggested that the rapid rise in wholesale used vehicle pricing is a precursor to an improvement in new vehicle sales and may even point to a recovery in the overall economy.

MP: The 1.3-point July increase in the Manheim Used Vehicle Value Index marked the seventh consecutive monthly increase (every month this year), following decreases in 10 out of the previous 14 months (from October 2007 to December 2008). The year-to-year increases in May (1.49%), June (5.84%) and July (5%) for the index follow 17 consecutive months of consecutive year-to-year decreases (Nov. 2007 to April 2009). Further, the July 2009 reading of 115.4 was the highest since September 2007, so the index is now back to a pre-recession level.

Thursday, August 06, 2009

Health Care Conflation and Market Solutions

Wikipedia: Conflation occurs when the identities of two or more individuals, concepts, or places, sharing some characteristics of one another, become confused until there seems to be only a single identity — the differences appear to become lost.

In all of the ongoing debates on health care, medical costs, the uninsured, etc., it seems that we have conflated two very separate issues: a) routine health care that is generally low cost and affordable, and b) serious, catastrophic health problems, which could be potentially very costly.

Routine health care is conveniently provided by retail health clinics at affordable prices at more than 1,000 locations around the country in stores like Target, Wal-Mart, Publix, Meijers, Walgreens, etc. that are open 7 days a week. As I have written about before on CD, these competitively-priced clinics provide sports, camp and school physicals for only $29. Further, Wal-Mart and its many competitors provide generic prescriptions for $4 per month. For these types of prescription costs, and routine "health care," I don't think anybody would argue that the costs are unaffordable, and it would be hard to argue that increased government intervention could possible make these routine services more affordable.

But what about very expensive, catastrophic, and/or life-threatening illnesses that might require expensive medication? We certainly can't rely on Target and Wal-Mart for serious medical problems like spinal cord injury rehabilitation, burn care, cleft lip and palate care, medical and rehabilitative services for congenital deformities, problems resulting from orthopaedic injuries, and diseases of the musculoskeletal system. And what if children have these medical problems, they certainly don't have the financial resources to pay for these expensive medical procedures. Does that not then justify government intervention and government insurance for these extremely expensive, catastrophic medical treatments, some of which are for life-threatening illnesses?

Every year, the Shriners Hospitals for Children provides care for thousands of kids with orthopaedic conditions, burns, spinal cord injuries, and cleft lip and palate, in a family-centered environment at no charge. It's how Shriners Hospitals has been helping kids defy the odds since 1922.

Bottom Line: There are private, market-based solutions to both routine health care and for even catastrophic, life-threatening conditions.

A few days ago, the New York Fed released its latest "Probability of U.S. Recession Predicted by Treasury Spread," with data through July 2009, and the Fed's recession probability forecast through July 2010 (see chart above, click to enlarge). The NY Fed's model uses the spread between 10-year and 3-month Treasury rates (3.38% spread in June, the second highest since May 2004) to calculate the probability of a recession in the United States twelve months ahead.The Fed's data show that the recession probability peaked during the October 2007 to April 2008 period at around 35-40%, and has been declining since then in almost every month (see chart above and chart below). For July 2009, the recession probability is only 0.97% and by July 2010 the recession probability is only .09%, the second lowest level since May 2005.Further, the Treasury spread has been above 2% for the last 17 months, a pattern consistent with the economic recoveries following the last six recessions (see chart above). The pattern of the recession probability index so far this year (going below double-digits and declining monthly) is very similar to the pattern starting in March 2002 that signalled the end of the 2001 recession (see chart below).

And Just To Make It Interesting......

NEW YORK (Dow Jones) --Twitter Inc., the fast-growing microblogging service, was inaccessible Thursday morning, struck by a "denial-of-service" attack, the company said on its status blog. "We are defending against a denial-of-service attack, and will update status again shortly," the company said in a post shortly before 11 a.m.

In an update to the blog post, Twitter said the site is back online, but that the company is "continuing to defend against and recover from this attack." The site will remain slow for users attempting to access it while Twitter attempts to recover. Denial-of-service attacks are a common weapon employed by cyber criminals (see cartoon above) to disrupt the working of Web sites. Perpetrators enlist millions of computers to attempt to access a particular site. The site cannot handle the massive increase in traffic, and is rendered inaccessible.

While disruptive and hard to trace, this type of cyber attack is considered by experts to be a relatively unsophisticated technique. The attack itself doesn't attempt to infiltrate the internal operations of a company's computer infrastructure. It simply renders its Web site inactive.

The attack on Twitter represents the latest in a string of denial-of-service attacks against several high-profile Web sites. In early July, a number of U.S. government Web sites, as well as the Web site of the New York Stock Exchange and several South Korean sites, were the target of similar actions.

UK Surgery 'Tourists' Avoid NHS Queues

UK Press Association -- Four out of 10 Britons going abroad for surgery do so to avoid NHS waiting lists at home, a survey has revealed. This was the top reason for seeking treatment, including dentistry and eye laser surgery, while 30% went overseas because it was cheaper.

Jobless Claims Fall -103,500 in 4 Months; It's Looking A Lot Like The End of a Recession

WASHINGTON/WSJ -- The number of U.S. workers filing new claims for state jobless benefits fell last week, providing another glimmer of hope that the economy may be on the road to recovery. Initial claims for jobless benefits fell by 38,000 to 550,000 on a seasonally adjusted basis in the week ended Aug. 1, the Labor Department said in its weekly report Thursday. The four-week average of new claims, which aims to smooth volatility in the data, fell by 4,750 to 555,250, the lowest level since Jan. 24 (see top chart above).

MP: The bottom chart above shows the drop of -94,000 jobless claims (4-week moving average) in the six month period between October 2001 and March 2002 that signalled the end of the last recession. Compare that drop in jobless claims in 2001 to the -103,500 decline over the last four months and it's sure looking a lot like the end of the current recession.

Wednesday, August 05, 2009

Las Vegas Home Sales Increase 15th Straight Month

DQNews.com -- Las Vegas region June home sales climbed to the highest level for any month since December 2006 as more than two-thirds of all buyers in the resale market continued to snap up foreclosures. The median sale price held steady, marking the second month in a row in which it didn't erode on a month-to-month basis, as it had for 16 consecutive months prior to May.

A total of 5,519 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County) last month, up 21.7% from May and up 44.1% from a year ago (see chart above). It was the highest sales total for any month since 5,780 homes sold in December 2006, and the highest for any June since 8,110 homes sold in June 2006.

June marked the 15th consecutive month in which sales of existing single-family detached houses rose on a year-over-year basis. The 4,042 single-family house resales last month were the highest for any June since 4,846 sold in June 2005. Resale condos have seen an annual sales gain for 12 straight months.

The median price paid for all new and resale houses and condos sold in the Las Vegas metro area last month was $135,000, unchanged from May but down 41.3% from $230,000 a year ago (see chart above).

Phoenix Home Sales Increase 12th Straight Month

DQNews.com -- Sales of existing houses and condos in the Phoenix area rose in June to the highest level for that month in four years, with the non-foreclosure market continuing to account for a greater portion of sales. The modest shift away from lower-cost lender repossessions enabled the overall median sale price to edge higher than the prior month for the second month in a row.

A total of 10,731 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in June, up 12.2% from May and up 40.4% from a year ago (see chart above). Total home sales have risen on a year-over-year basis for six consecutive months. However, sales of existing (not new) houses and condos combined have risen on a year-over-year basis for 12 consecutive months, and the June resale total of 9,720 was the highest for any month since March 2006.

The median price paid last month for all new and resale houses and condos combined was $130,000, up 0.4 percent from May but down 36.6 percent from a year ago. The tiny month-to-month gain was the second in a row. May’s 3.5 percent increase over April’s median marked the first such month-to-month rise since the overall median rose 1 percent, to $256,000, in March 2007.

States Favor Democrats By A Factor of 10:1

The road back to power for the Republican party looks long and steep judging by the latest polling data from Gallup. In the first six months of 2009, only four states solidly supported the Republicans (with an advantage of ten percentage points or more over the Democrats in polls). Just one other state, Alabama, leans Republican (between five and nine percentage points in favour of the party). Contrast that with the nearly 40 states that favor the Democrats (see map above).

India's Benchmark BSE Index Up By Almost 100%

MUMBAI -- Institutional buying in heavyweights and select blue chips in the last hour of trade helped Indian shares reverse early losses and end slightly higher Wednesday. The Bombay Stock Exchange's benchmark Sensitive Index ended up 0.5% at 15,903.83. The 30-stock index traded between a low of 15,695.11 and a high of 15,973.10 in a volatile session.MP: India's benchmark BSE Index is now just below 16,000, the highest level since May 2008 (see chart above), and now almost double the level of early March when India's benchmark index approached 8,000.